You don't have to invest a lot of money to reap big gains over the long run. Of course, your money has to be invested in the right way to achieve tremendous success.
Think of a lever lifting a boulder. The amount of money you invest is the equivalent of the amount of force you exert on the lever. The stocks that you buy and your investing timeline are like the lever itself. And the boulder represents the size of your return.
If you have a short lever (i.e., low-growth stocks and short time horizon), the boulder you're able to lift (your return) is going to be small. But if you have a long lever (high-growth stocks and a relatively long investing time frame), your boulder/return will be much larger.
Do you have $1,000 to invest? Consider investing it in one of these hot growth stocks and holding your position for at least five years.
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1. Alteryx
A whole lot more data is being generated every second. That data is useless if it can't be analyzed. The problem is that most of the tools available for data analysis aren't easy to use and can't enable quick analysis of data. Market researcher IDC estimates that $60 billion each year is wasted due to analysts manually entering information in spreadsheets. Alteryx (AYX) solves this problem.
The company's platform pulls together everything an analyst needs to easily and quickly analyze large amounts of data. No manual entry into spreadsheets or programming is required. Users love Alteryx's software so much that it won the 2019 Gartner Peer Insights Customers' Choice award for data science and machine learning platforms. Around 36% of the 2,000 largest organizations in the world now use Alteryx for enterprise data analytics.
Alteryx's revenue soared 65% in 2019. The economic impact of the COVID-19 pandemic could cause the company's growth to slow this year. However, the long-term prospects for Alteryx remain very good. The global big data and analytics software market stands at close to $47 billion. Alteryx has less than 1% of this market currently, but its differentiation from other software products should enable it to grow its market share significantly over the next decade.
2. Guardant Health
In many cases, cancer that's caught early can be treated effectively, resulting in saved lives. Even when cancer isn't detected early, identifying the best treatment option for the specific type of cancer can also help save patients' lives. Identification of the specific type of cancer a patient has is also important to drugmakers in testing experimental cancer drugs. Guardant Health's (GH -6.57%) liquid biopsy products check off all of these boxes.
Liquid biopsies use blood tests to detect tiny fragments of DNA broken off from cancer cells. Guardant Health is a leader in liquid biopsy development. Its Guardant360 product helps match cancer patients with the best therapy. Biotechs and pharmaceutical companies use GuardantOMNI to screen patients for clinical trials evaluating cancer drugs. Guardant Health also has developed LUNAR liquid biopsy tests that can only be used in research right now but hold the potential to detect early stage cancer and monitor for cancer recurrence.
The company blew past Wall Street estimates with its fourth-quarter results announced in February, posting year-over-year revenue growth of 91%. Guardant Health is only scratching the surface of its long-term opportunity, though. Its Guardant360 product claims an addressable market of $6 billion annually in the U.S. alone. The market for the company's LUNAR tests could top $45 billion.
3. The Trade Desk
If you were a fan of the TV series Mad Men that ran several years ago, you're probably familiar with the back-and-forth nature of negotiations between advertising agencies and media outlets. But the series was set in the 1960s. Today's ad world is a lot different thanks to the rise of digital ads and programmatic ad buying and selling using software. The Trade Desk (TTD -6.23%) reigns as the king of the buy-side programmatic advertising platform market.
The Trade Desk's platform enables ad agencies to instantly and cost-effectively buy ads from over 500 billion digital ad opportunities each day. Its technology allows these agencies to target specific consumers in a way that wasn't possible in the past. Gartner named The Trade Desk as a leader in its 2019 Magic Quadrant for ad tech. The Trade Desk also won a 2020 Gartner Peer Insights Customers' Choice award in the category of ad tech.
While The Trade Desk's sales soared 35% in the fourth quarter of 2019, it's poised for an even bigger 2020 despite the COVID-19 outbreak thanks in part to surging demand for connected TV (CTV). Programmatic advertising currently represents a market of $34 billion, but it's quickly capturing a much greater share of the total global advertising market that should approach $1 trillion by 2025. The Trade Desk is the leader in what many agree is the future of advertising.
Which is the best pick?
If I could pick only one of these stocks, it would probably be The Trade Desk. I think that the market potential for programmatic advertising and the company's competitive advantages in its market make The Trade Desk a winner. But I don't think investors would go wrong with buying any of these stocks. Even better, buy all three.
